Maryland sees one of nation's largest job declines in July

Maryland's unemployment rate shot up in July when employers cut 9,000 jobs — one of the largest losses in the country, the federal government said Monday.

The estimate from the U.S. Department of Labor suggests a slowdown in Maryland's economy, which has a high share of federal employment and contracting and has been buffeted by belt tightening in Washington.

It was a difficult month in a rough year for the state's job market. As the state pinballs between large monthly gains and losses this year, the net result is that employers have added just 900 jobs between January and July. The state gained 7,500 jobs during the same months last year and more than 15,000 during those months in 2012.

Maryland's unemployment rate jumped from 5.8 percent in June to 6.1 percent in July. That's just shy of the nation's jobless rate, an unusual circumstance for a state where unemployment is typically relatively low. The U.S. rate has largely improved in recent months as job growth outpaced the state's.

Maryland "is now a middling performer in terms of unemployment and very much a laggard in terms of job growth," said Anirban Basu, a Baltimore economist who runs the consulting firm Sage Policy Group.

Both Basu and Moody's Analytics economist Andrew Davis point to federal cutbacks as the state's main challenge. Even as the nation's economy expanded overall during the spring, federal outlays fell — a problem for Maryland.

We keep spending more and more money on schools and some how they cut education jobs? When MD is so dependent on the federal government and the federal government decides to cut defense spending what do they think will happen? To some degree this doesnt surprise me. Up my way I have 3...

As a result, "the U.S. is really kind of pulling away from Maryland," Davis said. "The gap, especially with this month's report, appears to be widening."

Only Ohio lost more jobs in July, the Labor Department estimated. Most of the country — 36 states and Washington, D.C. — gained jobs last month, the agency said.

The numbers are preliminary, and economists predict this month's data could be significantly revised because of data from the education sector, where many don't work in the summer.

Several sectors in Maryland showed healthy growth in July. Construction, financial services and the trade, transportation and utilities industry each added more than 1,000 jobs.

And some employers are making plans for substantial growth. Coastal Sunbelt Produce, which distributes produce and dairy products, broke ground Monday on a new headquarters in Howard County. Officials there said they expect to add 400 jobs by 2018.

But the state lost 2,000 jobs last month in professional services, an industry heavy with federal contractors. And more potential cuts loom.

A June report from the Army analyzed the effects of reducing jobs at bases across the country, including potentially 4,300 positions at Aberdeen Proving Ground and 3,500 jobs at Fort Meade, both in the Baltimore region.

Davis expects improvements in Maryland next year. He forecasts that the private sector will pick up the pace as federal agencies and companies become accustomed to the sequestration budget cuts.

And the federal government can still give, not just take away. Maryland is on the short list for the Federal Bureau of Investigation's new 11,000-job headquarters.

Still, Maryland's outsized dependence on federal spending — built up over decades as federal contractors moved to Maryland to be close to Washington — worries economists.

"We are vulnerable," Basu said.

The economy could become a potent political issue in this year's gubernatorial election. The July jobs report prompted a volley between Larry Hogan, the Republican candidate, and Lt. Gov. Anthony G. Brown, the Democratic nominee.

"This latest report from the Department of Labor reiterates what we have been saying for months," Hogan said in a statement. "The failed policies of Anthony Brown and [Gov.] Martin O'Malley over the last eight years have crushed Maryland job creators, and have made it more difficult for average Marylanders to support themselves and their families."

Brown campaign manager Justin Schall shot back that Hogan hasn't explained his plan for job creation, while Brown "has demonstrated his commitment to helping increase employment through initiatives such as increasing small business' access to capital, expanding public-private partnerships, and investing in infrastructure."

"Maryland has had positive job growth for nine of the last twelve months, but Larry Hogan continues to root for failure," Schall said in a statement.

Both Basu and Davis think the July job losses for Maryland may be overestimated. They see statistical noise in the Labor Department's preliminary figures, which show a significant share of Maryland's reductions hitting two education-related sectors.

State government shed 2,300 jobs as a result of cuts at state-funded colleges and universities, while the education services sector, filled with private institutions, cut 3,600 jobs, the Labor Department estimated.

Those numbers are adjusted to try to account for normal patterns of hiring and layoffs that shift with the seasons. But sometimes that adjustment goes awry — particularly in a field where thousands of workers stop collecting paychecks at slightly different times each spring and start again in the fall.

The Labor Department tallied lower-than-normal cuts in June in both education sectors, followed by higher-than-normal cuts in July. Basu and Davis suspect that timing played havoc with the figures this year.

Officials with the University System of Maryland said their institutions had only the usual slimming down that comes when students leave at the end of the spring semester.

"There's nothing extraordinary about this year," said JoAnn Goedert, the system's associate vice-chancellor for human resources.

Bernie Sadusky, executive director of the Maryland Association of Community Colleges, said enrollment is down statewide for community colleges, which affects employment. But he said he had no reason to expect a larger than normal drop in the number of community college workers after the spring semester ended.

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